General Mills Q4 Earnings Call Transcript

123jump.com Staff
16 Jul, 2009
New York City

General Mills fourth quarter revenue rose 5% to $3.65 billion and net inocme nearly doubled to $358.8 million due to hedging impacts and increasing eat at home habits. Earnings per share were $1.07 up from 53 cents a year-ago.

General Mills, Inc. ((GIS))
Q4 2009 Earnings Call Transcript
July 1, 2009 8:00 a.m. ET

Executives

Kris Wenker – Vice President Investor Relations
Ken Powel – Chief Executive Officer
Don Mulligan – Executive VP & Chief Financial Officer
Chris O’Leary – Executive VP & Chief Operating Officer, International
Ian Friendly – Executive VP & Chief Operating Officer, US Retail

Analysts

Judy Hong – Goldman Sachs
Terry Bivens – JP Morgan
Eric Katzman – Deutsche Bank
Unspecified Analyst
David Driscoll - Citigroup
Unspecified Analyst
Andrew Lazar - Barclays Capital

Presentation

Kris Wenker – Vice President Investor Relations

Okay so an official good morning everybody. For those of you I haven’t had a chance to meet, I’m Kris Wenker and I want to welcome all of you that have joined us here in Boston. We’re also welcoming everyone who is listening on the webcast. Here with me are General Mill’s Chairman and CEO, Ken Powel, our CFO Don Mulligan, Chris O’Leary, who is Chief Operating Officer for our international businesses, and Ian Friendly, who is our Chief Operating Officer for US Retail. Before they begin I need to remind you that our presentation will include forward-looking statements that are based on management’s current views and assumptions and as the slide behind me illustrates, there are many factors that could cause our future results to be different than our estimates. We issued a press release earlier this morning that contains our fourth quarter and 2009 fiscal year results. You can find a copy of that press release on our website along with slides we’ll be using in today’s presentation and the last few slides will reconcile non-GAAP measures that we’ll be referencing today.

So with that I will turn the meeting over to Ken Powel.

Ken Powel – Chief Executive Officer

Okay well good morning to one and all. Thank you Kris. We are very glad that you have been able to join us this morning to hear us talk about General Mills’ strong performance in 2009 and our plans for continuing growth in 2010. Four years ago we established the model that you’re looking at right now for our earnings growth. It calls for low single-digit growth in net sales, mid single-digit growth in segment operating profit and high single-digit growth in earnings per share. And we believe that this earnings growth coupled with an attractive dividend yield should result in double-digit returns to General Mills shareholders over time. Now as we’ve said many times before this model is not the absolute best we can do, but it is the level of growth we believe we should deliver to shareholders consistently and over time. In good years we can exceed this model and I’m very pleased to report that the fiscal 2009 was a very good year.

Today’s press release summarizes our results which exceeded our long-term model and the specific targets we set for 2009, back when the year began. Net sales increased 8% to reach $14.7 billion. Segment operating profits grew faster than sales, up double-digits to exceed $2.6 billion. Earnings per share grew 2%. This includes several items that effect the comparability of our results year-over-year. Excluding those items earnings per share totaled $3.98 in 2009, up 13% from comparable earnings of $3.52 per share in 2008. Sales and earnings growth in 2009 include some benefit from an extra week this fiscal year. But our results exceeded our growth targets even without the extra week and we believe this represents strong financial performance in a very challenging operating environment. Our net sales growth in 2009 included contributions from a pricing and mix which we needed to partially offset higher input costs. Pound volume contributed two points of net sales growth and foreign currency translation reduced net sales growth by two percentage points.

Our sales growth was broad-based as you can see in this table. Each of our US retail divisions recorded net sales increases including double-digit gains for Small Planet Foods, for baking products, Yoplait, Pillsbury, and Big G Cereals. I should note that snacks growth would be higher if you exclude the divested Pop Secret business from both years. And Small Planet’s reported growth benefited from the Larabar acquisition. Net sales for our international segment also grew double-digit on a constant currency basis. So our business portfolio is clearly showing its resilience in this challenging economic environment. We faced significant input cost pressure in our business last year. Our plan estimated 9% inflation, the highest rate that we’ve seen in many years and our actual costs essentially matched that estimate. I’m pleased to report that our company wide focus on holistic margin management or as we call it HMM, that focus enabled us to offset this cost pressure and protect our gross margin in 2009.On an as reported basis, gross margin was within 10 basis points of last year and if you exclude several items that effect comparability of results year-over-year, gross margin rose modestly.

By protecting our margins we generated the funds to increase consumer marketing support for our brands. In 2009 our consumer marketing investment grew at a strong double-digit rate building on spending increases made in each of the past three years. This reinvestment is fueling net sales growth and it supports value added brands in an environment where lower priced retailer brands are getting increased attention. We took actions during 2009 that strengthened our business portfolio. We acquired LaraBar, a leading fruit and nut based energy snack. We sold our Pop Secret microwave popcorn business. We exited two foodservice businesses and we exited pasta and cheese bread businesses in Brazil in order to focus our operations in that country on our Nature Valley and our Haagen-Dazs brands. We finished the year with strong performance in the final quarter. Net sales grew 5%, segment operating profits were up double-digit due primarily to lower input costs year-over-year. Diluted earnings per share for the quarter were double last year’s level, primarily due to a large swing in the mark-to-market valuation of commodity positions. Excluding mark-to-market effects and the other items affecting comparability of results our fourth quarter EPS would be up 18%. And remember these results once again reflect some benefit from the extra week.

Reported sales growth for the last quarter doesn’t quite do justice to our real business momentum because foreign currency exchange and divestitures are dampening the number, but as you see in the press release, US retail sales grew 12% in the fourth quarter. International net sales were also up 12% on a constant currency basis and the bakery and foodservice sales decline is moderated when you exclude results from divested businesses in both years. We also continue to reinvest at strong levels in the fourth quarter with consumer marketing spending up 19% for the period. We expect that investment to help sustain our top line momentum as we move into 2010. Our businesses generated strong cash flow in 2009 and we returned much of that cash to shareholders through share repurchase and increased dividends. Annual dividends per share grew 10% in 2009, and on Monday of this week, we announced a 9% increase in the quarterly dividend rate to $0.47 per share effective with the August 3rd payment.

We’ve stayed tightly focused on our business model and our long-term growth goals and that’s resulted in consistent superior performance. Over the past three years we’ve added $3 billion sales, more than $500 million in operating profit, and we’ve grown our underlying earnings per share at a double-digit compound rate. This sustained financial performance stacks up very well relative to the results from our peer companies. And our goal is to build on this strong growth in 2010 and we think our chances of doing that are excellent.

The major food categories where we compete, are growing and at attractive rates. Our leading brands are driving growth in our categories because they offer the nutrition, convenience, and value that today’s consumers are looking for. Our company-wide focus on holistic margin management is protecting our margins. And our increased consumer marketing support is fueling net sales growth for our businesses. So we’re looking forward to telling you more about our progress and the plans we have for 2010 and here’s the agenda for the rest of our time together this morning.

Ian Friendly will start us off with an update on the US retail business and then Chris O’Leary is going to talk about the growth plans for our international operation. Don Mulligan will give you an update on bakeries and foodservice and then summarize General Mills’ financial targets for fiscal 2010. And I’ll wrap up with a few comments on our over arching business strategies as we go into the New Year, and then we’ll be happy to take some questions, so with that, over to Ian.

Ian Friendly – Chief Operating Officer, U.S Retail

Thanks Ken and good morning everyone. I’m happy to be here to update you on our 2009 performance and our plans to drive continuing growth for our categories and our brands in 2010. General Mills U.S retail businesses just wrapped up a terrific year. Sales were up 11% crossing the $10 billion mark for the first time. Profit growth was even stronger, up 12% and even with significantly higher input costs and strong marketing spending behind our brands we grew our operating margin by 30 basis points to 22%. Our brands are one of our biggest assets and we continue to invest to keep them healthy and relevant. Consumer marketing spending for US retail was up 19% in 2009. Our total trade spending increased as well, but our programs were more efficient so trade costs per case declined for the fourth quarter consecutive year.

We delivered great innovation in 2009. We introduced 80 new items including two new product lines, Savorings and Macaroni Grill that are both off to a good start. Our new introductions were highly incremental and margin accretive, consistent with our goals. More than 5% of our 2009 sales came from products introduced in the past year. We also improved the health attributes of our portfolio. Since 2005 we’ve made health improvements on 45% of our US retail products. Our product innovation and consumer marketing, resulted in increased base line or non-promoted sale, across most of our key categories last year. We’re pleased with these gains because base lines are one of the best indicators of the underlying health of a business.

We drove strong growth across both measured and non-measured retail channels. In the channels where we have data, our retail sales grew 7% overall last year. Growth in non-measured channels was even stronger. Our net sales to club store customers increased at a high single-digit rate and our sales to Drug and Discount, Dollar Stores and the Natural Channel, were all up at strong double-digit rates. So when we look at Nielson data together with estimates of our performance in non-measured channels we grew our aggregate dollar share in 2009. That’s due in part to the fact that our brands represent good value for consumers. This slide shows the average non-promoted price per serving for a variety of our products. Even before any reduction for merchandising, they are very affordable choices. And as a result our brands are growing despite increased attention on retailer brands in this environment. In total, retailer brands represent 15% of sales in our categories. That’s up from a year ago but still well below the 19% of sales they hold in food and beverage categories across the store. In fact because our leading brands are driving growth for our retailers, we actually increased our distribution in 2009. Our total points of distribution were up 2% for the year and that includes growth in the last quarter. We finished the year with good momentum. Net sales grew 12% in the fourth quarter including the benefit of the 53rd week, with growth across all divisions and our operating profit grew even faster as we recovered gross margin given up in last year’s fourth quarter.

As we had projected our merchandising levels were down in the final quarter from high prior year levels but our base line growth remains solid and we continue to reinvest at strong rates with marketing spending up 26% in the fourth quarter. We believe we can continue to lead growth for our brands and our categories in 2010. We compete in growing on-trend categories with a terrific portfolio of brands. We’re driving growth for our retail partners across the grocery store and I feel great about our product and marketing innovation plans for the New Year. It certainly helps to compete in good categories and we do. Our categories are on trend with the health and value needs of today’s consumers and they deliver great taste and convenience. Sales of our food categories grew about 4.5% in 2009 in measured channels alone, 50% faster than sales growth across food and beverage categories in total.

We compete in these categories with terrific brands, and we hold the number one or number two share positions in all our key categories. General Mills is driving growth across the store for our retail partners. This slide shows the dollar share of the top 10 manufactures across all food and beverage sales in the Nielson measured channels. The list includes companies you know well like Kraft, Kellogg’s, and Campbell’s. General Mills share of total food and beverage dollar sales is about 3.5%, but our share of total growth across all food and beverage categories last year was 5%. We were the only top 10 manufacturer to grow our share of industry sales in 2009. We led growth in our categories and we plan to keep it up in 2010. Our business model will remain the same. We’ll drive growth through innovation and brand building efforts fueled by our continued commitment to holistic margin management. You’ll see a greater focus from us on the inherent value our products offer. It is something consumers care about and our portfolio delivers. I think the game will be won in 2010 by those who can deliver good growth on the top line, so that’s where I’ll focus most of my comments today.

Let me start with Big G. 2009 was nothing short of a fantastic year for our cereal business. Net sales were up 11%. Growth in measured channels was strong resulting in a share gain of more than a point. Our sales in non-measured channels grew nicely as well including double-digit growth in club, dollar, and drug and discount stores. We delivered strong HMM innovation resulting in margin gains and the number of households that buy our cereals increased by more than a point in 2009. That bodes well for future growth. The real key to our performance this year was base line growth. Consumers bought Cheerios, Lucky Charms, and Fiber One at every day prices not just when they were on sale. Base line sales grew 4% in 2009 and growth accelerated during the year with base lines up 5% in the second half. The percent of our dollar volumes sold at reduced prices was actually down slightly for the year.

But the merchandising was more impactful resulting in good growth in merchandising effectiveness measures. And our merchandising returned to a more balanced flow across the year so quarterly comparisons in 2010 will be less noisy. Cheerios, the number one cereal franchise in the US hosted a 10% sales increase in measured outlets. We achieved strong double-digit gains on Honey Nut and Multi Grain Cheerios and new Banana Nut Cheerios launched in January was the largest cereal introduction in the last 12 months.

The good growth extends beyond Cheerios. Many of our kid focused brands were up nicely as well; Lucky Charms, Cinnamon Toast Crunch and Reese’s Puffs, all delivered strong growth in 2009 led by base line increases. Fiber One sales were up 35% in AC Nielson outlets. This brand is our fastest growing cereal with Hispanic consumers, an important demographic. In 2010, Big G is focused on driving continued growth with innovation on our core brands. For starters, we’ll bring flavor varieties to growing Total and Cookie Crisp franchises. We’ll convert additional Chex cereal varieties to gluten free building on the success we had in 2009 with gluten free Rice Chex. And we’ll offer larger packages on some of our most popular brands as a value offering for consumers. We’ll support our established and new items with strong consumer marketing efforts. In 2010 Honey Nut Cheerios will expand its successful Hispanic campaign. We’ll continue to focus on the role Cheerios can play in helping to reduce the risk of heart disease and we’ve got a great Cinnamon Toast Crunch ad that kids love.

So, by staying focused on the fundamentals and innovating, Big G will do its part to keep the cereal category growing. Industry growth in 2009 was the best we’ve seen in 14 years and we expect the category to keep growing in the years ahead. People are eating breakfast at home more often and cereal is the most frequently chosen option. And despite all that growth, cereal is still consumed by only a third of all breakfast occasions. We believe Big G has the brands to lead continued category growth. Let’s turn to the soup category, where Progresso has driven growth for the ready-to-serve segment in recent years with innovation like Rich & Hearty, Reduced Sodium varieties, and the Light segment we created in 2008. Ready-to-serve soup is now a $1.6 billion category in measured channels alone. And we estimate sales exceed $2 billion across all channels. Progresso has grown faster than the category for the last six years and our share of ready-to-serve soup has increased to nearly 35% of category sales. We think this category is right on trend with consumer needs for taste, convenience, health, and value. So in 2010 we’re focused on innovation that we think will drive growth for our business and the ready-to-serve soup category. In July, we’re introducing Progresso High Fiber soups. Nine out of 10 Americans fail to get their daily value of fiber. These four new soups provide 28% of the daily recommended intake. We think this is some good health news for the soup category. Our advertising will focus on the many benefits of ready-to-serve soups and Progresso’s unique combination of great taste and health. So we’re looking forward to good growth on this business in 2010.

Yogurt is another category that lines up well with the needs of today’s consumers. Yoplait has delivered great growth in this category. Total sales in measured channels were up 8% last year led by 18% growth on our Light business. This is the fifth consecutive year of double-digit growth for the Light business. And long-term growth prospects for this category are excellent. Per capita consumption in the US is still well below that of more developed yogurt markets around the world. In 2010 we’re focused on bringing innovation to keep the category and our Yoplait business growing.

We’re introducing Yoplait Delights Parfait. Delights have two visible yogurt layers, a thick creamy texture, and come in great flavors like Chocolate Raspberry, and Lemon Torte with only 100 calories. They’re a smart snack or dessert alternative. We think Delights will drive incremental category sales. We’re also introducing Yoplait Smoothie. These fruit and yogurt pouches will be in the frozen section of the store. Consumers just add milk and blend to make a great tasting smoothie with the benefits of live and active cultures. We tested this product in market last year and it performed very well. It will be available nationally in September. We’ll also continue to build our core business. We’re reintroducing Yoplait Whips with a new vanilla crème flavor and a try it frozen campaign. By putting Whips in the freezer, consumers can have a new way to enjoy this great product. We’ll communicate key health benefits like the calcium and vitamin D in Yoplait or the new and improved Fiber One yogurt with five grams of fiber, zero grams of fat, and only 50 calories per serving. And we’re extending our Yo-Plus probiotic line with three new reduced calorie items. Yo-Plus Light has only 70 calories per serving and is a nice addition to this growing line.

Now, the three businesses I just covered, cereal, soup, and yogurt, are important businesses to us. They represent about 40% of US retail net sales and they are the ones you ask about most often. But the key to our performance this past year has been the strength of our whole portfolio, so I’d like to spend some time now on the brands that make up the other 60% of our sales.

Over the past year many of General Mills long established brands have shown their real resilience. Retail sales of Bisquick and Gold Medal Flour both grew more than 20% in 2009. Core brands like Helpers, Pillsbury Toaster Strudel, and Totino’s Pizza Rolls, all delivered strong double-digit growth. Sales for grain snacks including Nature Valley and Fiber One were up 10% last year. In fact General Mills is the market share leader in the grain snacks category for the first time in 15 years. Betty Crocker desserts were up 9% and Pillsbury refrigerated baked goods, Old El Paso Mexican products, Green Giant frozen vegetables, and Chex Mix all delivered solid retail sales growth. So we really do have a portfolio for all seasons and its helping us stay strong in today’s challenging environment. We will keep investing and innovating across our portfolio and we have a number of initiatives planned for fiscal ‘10. We’re adding two new varieties to the Savorings line we launched in January giving consumers more options for their at home entertaining. We’re adding new flavors to our restaurant-favorites line, which helps consumers prepare restaurant quality meals at home. And we’re bringing the Wanchai Ferry brand to the frozen section with the introduction of five easy to prepare entrées. These products target a rapidly growing section of the freezer case.

They are designed to serve two and provide a complete meal including the chicken or shrimp, ready in just 14 minutes. We’re extending Nature Valley to a new form with the introduction of Nature Valley Nut Clusters. This product is a 100% natural combination of granola, nuts, and honey. We think this product can bring new users to the Nature Valley franchise. And we’re introducing a line of gluten-free baking products. These are the first nationally branded gluten-free baking mixes and they are already generating great response from the 12% of consumers who are trying to reduce or avoid gluten in their diets. In the refrigerated dough section, we’re adding Simply Cookies. These ready to bake cookies have no trans-fat and no artificial flavors, colors, or preservatives. They have a simple ingredient list and they taste great.

Sales for natural and organic foods overall are being impacted by the economy but our Small Planet Foods business is performing well. Last year our brands gained market share in 10 of the 12 categories we tracked in the traditional grocery and natural channel. We’re introducing nine new items this summer including new cereals and grain bars, two reduced sodium soups, and new flavors of Larabar. Those were just a few of the items we’re launching in 2010. In total we have more than 50 new products launching in the first half and these items meet the goals we established for our new products a few years ago. They are bigger ideas, more incremental, and margin accretive. We’ll couple this strong innovation with impactful consumer marketing. We have lots of great examples but I’d like to highlight just a few today.

The first ad highlights the value and special occasion quality of our Pillsbury biscuits. Next is the first television spot we’ve done on Fiber One Snack Bars. We’ll follow with a Yoplait ad targeting Hispanic consumers and then end with a spot for Honey Nut Cheerios that is driving terrific growth for this brand. Let’s take a look.

Music and trailer of ad

In total we’re projecting a high single-digit increase in consumer spending for our U.S retail businesses in 2010. So we’re not backing off from our strong levels of innovation and brand building. Consumers are back in the store and products across our portfolio deliver what they need; taste, convenience, nutrition, and value. So we think this is a great time to talk about our brands and introduce new items. Let me wrap up with a quick word on holistic margin management. It is core to what we do and enables us to grow our margins and invest in our brands. Behind the scenes we have hundreds of initiatives under way to drive value by focusing on the things that matter to our consumers and reducing waste across our operations. Although input cost pressure is moderating, we are just as committed to HMM. It’s not a productivity initiative, it’s how we do business and we think it gives us a competitive edge to drive growth for our brands. Overall I’d say it’s a great time for General Mills U.S retail businesses. The at home eating trend is at our back.

Our categories are growing. We’ve got an advantaged brand portfolio. We’re executing well against our proven business model. And we think we can stay a step ahead by delivering innovation and value for our customers and consumers. So for 2010, our targets include low single-digit growth in net sales driven by volume. We’ve got a strong innovation lineup and we plan to continue to invest to grow our brands. We’ll use HMM to fuel this investment and help us expand our margins. And we’re planning for a mid single-digit increase in operating profits in line with our long-term model. So I expect another strong year for our US retail segment. And with that, I’ll turn you over to Chris O’Leary, to discuss our international businesses.

Chris O’Leary – Chief Operating Officer, International

Thanks Ian and hello everyone. I’m happy to report that 2009 was a good year for General Mills international as well. Net sales last year totaled $2.6 billion. Our top line has grown at a 12% compound rate over the last three years. Profit growth has been strong too, although fiscal 2009 results were significantly impacted by foreign exchange.

The dramatic strengthening of the US dollar last year created foreign currency headwinds for us. It reduced our net sales growth by nine points. It had an even bigger impact on our operating profit as you can see on this slide. On a constant currency basis, we delivered 10% sales growth and 11% increase in operating profit last year, consistent with the double-digit growth we have posted in recent years. The FX impact has moderated recently but we still expect our reported sales and earnings growth will be reduced by translation and transaction effects in fiscal ‘10. Don will share some specifics on that later this morning. My comments today will focus largely on constant currency results to give you better visibility to the underlying performance of our business. Our key international brands are generating good growth before the impact of foreign exchange.

This slide shows 2009 sales growth on our global brands as well as key local brands. Wanchai Ferry and Nature Valley were both up more than 25%. Haagen-Dazs and Old El Paso delivered strong growth. Diablitos meat spread in Venezuela was up more than 20%. And net sales of Latina pasta in Australia grew 12%. Our sales also grew across all major geographies. This slide shows constant currency growth rates. Net sales in Europe grew 4%, driven by Old El Paso and strength in our UK business. Sales in Canada were up 7% with good gains from cereal and Fiber One bars. Sales in the Asia Pacific region grew 16%, led by China and in Latin America sales were up 22%, driven by Nature Valley and Haagen-Dazs as well as local brands like Diablitos. We grew across both developed and developing markets. Sales were up 13% in the UK, 11% in Australia and in our emerging markets, sales in India increased 37% and China delivered more than 20% sales growth.

We continue to aggressively expand our business in China. Our key brands there are Haagen-Dazs, and Wanchai Ferry and both continue to grow at strong double-digit rates. Haagen-Dazs is sold in more than 100 shops and we regularly introduce new products. In Haagen-Dazs Moon Cakes, our ice cream version of a traditional gift given during the mid autumn festival grew almost 40% last year. Our Wanchai Ferry frozen dumpling business is expanding rapidly as well, as we capitalize on consumers’ needs for increased convenience. And across our international businesses holistic margin management is really gaining momentum. It is quickly becoming part of the way we do business just like here in the U.S. In 2009 our HMM contributions were up more than 50%. As we turn our attention to 2010 we remain committed to our long-term model. It focuses on three growth strategies. First, we will drive top line growth through innovation and geographic expansion. Second, we continue to improve margins fueled by growth of our key businesses and our expanding HMM efforts. And third, we will keep building our infrastructure and developing our people to support the larger international business we envision.

We are focused on four global platforms. The first of these is cereal. Cereal sales in Canada are consolidated into our international segment results. The rest of our international cereal business is managed through our CPW joint venture with Nestle. The second global business is super premium ice cream where we have the powerful Haagen-Dazs brand. Next is, convenient meal solutions, like our Old El Paso and Wanchai Ferry ethnic products. And the fourth global platform is healthy snacking which includes the Nature Valley franchise. We are still in the building phase of these platforms and we have lots of room to grow by expanding distribution, and increasing household penetration. Cereal, Haagen-Dazs, Old El Paso, Nature Valley, each have operating margins above the company average. So our segment margin will improve as we expand these global businesses. Now I’d like to share our plans to drive growth in 2010 on each of these key platforms.

Ian talked earlier about our cereal performance in the US. Our cereal business in Canada just wrapped up a terrific year as well. We have been steadily gaining share for the last several years and our share was up a full point in 2009 driven by strong increases in base line sales. We will leverage Honey Nut Cheerios, our largest brand in Canada and then power the entire Cheerios franchise to drive growth in 2010. We’ll work to increase household penetration on core established brands like Fiber One and Oatmeal Crisp. And we’ll leverage our sponsorship of the Vancouver Olympics giving us some fantastic marketing opportunities like the Cheerios Cheer postcards pictured on this slide that consumers can send to their favorite Canadian Olympic athlete. Overall we believe we can continue to lead growth in the expanding cereal category in Canada. Our second platform is super premium ice cream where we compete with Haagen-Dazs. Haagen-Dazs stands for affordable luxury in more than 60 markets where it’s available. Sales on this business have grown in a 9% compound rate over the last five years. We sell our product in Haagen-Dazs shops, high end food service outlets, and retail stores. In 2010 we’ll strengthen our core business with additional flavors. And we’ll expand on the strong gifting tradition we’ve built with Haagen-Dazs Moon Cakes.

We will also continue to expand geographically, opening new shops in Egypt and in India. We have some good product innovation planned too. New Haagen-Dazs Ice Cream Smoothie is a blend of Haagen-Dazs ice cream and fruit sorbet. It has half the fat and 30% fewer calories than regular Haagen-Dazs ice cream, but still delivers the great taste and uncompromising indulgence that this brand represents. We’ve launched this in the UK, in France and in Spain, and initial results are quite encouraging.

Let me shift to Old El Paso, which serves as the introduction to Mexican food for many consumers around the globe. This brand is available in about 20 markets outside the US and our sales of this brand, in international markets actually exceeds sales in the US. In 2010 we’ll launch some new products including a Healthy Fiesta line in Australia that is lower in saturated fat and sodium and higher in fiber. We’ll extend the Old El Paso brand in Canada to side dishes including several rice varieties and we’ll continue to add to our product lineup in Europe with the introduction of several items including a new burrito kit. In addition to our new product offerings we have some great consumer marketing to bring new households to our Old El Paso brand. Wanchai Ferry is our authentic frozen dumpling business in China. Sales have increased more than 20% a year since 2004 and we’re really just beginning to expand this brand.

As dual income households grow, consumers are looking for increased convenience. Wanchai Ferry offers convenient dumplings and other dough products along with authentic homemade taste. We have two big opportunities to grow this business. First, we can take the brand to new cities. Today we are in more than 60 cities in China and we’re the top dumpling brand in the three largest markets of Shanghai, Beijing and Guanjo. In 2010 we have plans to add about 10 new cities. In addition to expanding geographically in China we can also expand Wanchai Ferry by entering new dim sum segments. To this point our products have been largely in the dumpling and wonton segments, which represent about half of total dim sum sales. In 2010 we’re entering the Baozi and Mantou segments. These segments represent another 20% of category sales. Wanchai Ferry is a strong equity in China and we’re extending it to more varieties that are important to Chinese consumers. The brand is travelling beyond the borders of China as well. Ian mentioned the Wanchai Ferry dinner kits and frozen entrées in the US. We recently introduced Wanchai Ferry to the United Kingdom with the launch of three dinner kits in that market.

Finally let me talk about our growth plans for Nature Valley. This is a great brand for General Mills here in the US and its proving to be a winner internationally as well. Sales have increased at a 25% compound growth rate over the last five years. And Nature Valley is currently available in more than 50 markets. That number is growing rapidly as we continue to introduce Nature Valley in new countries. In 2010 we’ll bring Nature Valley to Korea and to additional countries in the Middle East and we’ll add new cities in markets we’ve already entered. We’ll add Nature Valley chocolate varieties in Canada and in Europe and we have some exciting advertising initiatives in place. You can see a few examples on this slide. To date our focus has been on introducing the Nature Valley Crunchy Bar in markets around the world but our product pipeline for grain snacks is tremendous. Our domestic grain snacks business has consistently added new items like Chewy Trail Mix Bars that have been highly incremental and have driven growth in the category.

As you can see on this chart we believe many of these items are a good fit with consumers around the globe. We just started adding Chewy Bars in several markets and we see plenty of opportunity to grow our grain snacks business outside the United States. I’ve mentioned our brand building efforts a few times this morning. Our consumer spending was up at a double-digit rate last year on a constant currency basis. I’d like to take a few minutes now or a minute now and show you a few examples of some TV spots we’re currently running. First you’ll see a spot for Honey Nut Cheerios from Canada. Next is an ad for Old El Paso Crispy Chicken Fajita Kit. The third is a Nature Valley spot from the UK and finally you’ll see a Haagen-Dazs ad that features our new Smoothie. Let’s take a look.

Music and trailer of ad

We’re projecting another strong increase in HMM contributions for our international business in 2010 as we drive improvements across all aspects of our business. Key projects include automating production of Wanchai Ferry products, consolidating some of our Nature Valley packaging, locally sourcing Green Giant vegetables for Asia and driving efficiencies in our trade and our consumer spending.

The final key to our international growth is people development. Our focus is on building global talent with leadership development programs, improved systems and processes, and a work culture that makes us the employer of choice wherever we operate. We have a great team of people and we’re committing to helping them grow even stronger.

So let me summarize the outlook for our consolidated international businesses. Foreign exchange remains a headwind and it will impact our reported results on both a translation and transaction basis in 2010. We have strong brands that are growing but still have plenty of potential. Our HMM efforts are just beginning and we’ll support brand investment and fuel margin expansion. For 2010 we’re targeting mid single-digit growth and double-digit operating profit growth on a constant currency basis. Now before I turn it over to Don, let me comment briefly on our international joint ventures. Joint venture earnings in 2009 were $92 million, below last year’s levels due primarily to one-time gains in our year-ago numbers and the negative impact of foreign exchange.

Cereal Partners Worldwide, represents the majority of our joint venture sales and our share of CPW net sales exceeded $1 billion. Net sales for the Haagen-Dazs ice cream venture in Japan totaled almost $200 million with pound volume down due to the difficult economic environment there. For 2010 we’re targeting a mid single-digit increase in JV earnings driven by good growth on CPW. CPW as you know is our joint venture with Nestle selling cereal in more than 130 markets around the globe. Sales were up 9% for our fiscal 2009 period before foreign exchange impacts. Our core brands including Fitness, Nesquik, Cheerios and Chocapic continue to be important drivers of growth and we have excellent growth in key regional brands like Shreddies in the UK and PLUS in Australia. The global cereal categories continue to expand. But as you see on this slide per capita cereal consumption still leaves lots of room to grow. Sales in the UK and Australia are fairly well developed but the other markets the category is still in its early growth phase.

CPW is well positioned to capitalize on this growth with solid share positions in key established markets and a strong presence in many emerging markets like Russia, Brazil, Turkey, and Southeast Asia. This slide shows share performance in our 10 largest markets. CPW held or grew share in seven of their top 10 markets resulting in a net share increase for the joint venture in 2009.

So the outlook for CPW is very positive. We see continued category growth as per capita consumption increases. We are well positioned in markets we believe will be strong drivers of growth in the years ahead and we expect to achieve continued share gains as we invest in product innovation and consumer marketing. CPW is adopting holistic margin management as well and we expect that will fuel marketing investment and improve our margins. I’ll wrap up my comments this morning with these key points. General Mills businesses outside the US continued to deliver good growth. We have unique, well positioned brands in developing countries. Our joint ventures bring strong earnings and cash to our overall results. And much of our growth still lies ahead. Now I’ll turn you over to Don, to wrap up our business review.

Don Mulligan – Chief Financial Officer

Great. Thanks Chris and good morning everyone. As Ken mentioned I’ve got two topics to cover today. I’ll start with a review of our bakeries and foodservice business. As we’ve discussed before the current economic trends are a headwind for this segment of our business. You can see the impact of weak foodservice industry conditions on our pound volume results for the year, which were below prior year levels. However sales and operating profits were up modestly and remember that last year included unusually strong grain merchandising earnings. If you exclude grain merchandising profits for both 2009 and 2008, operating profits for this business segment grew 15% in 2009. That is industry leading performance in this environment. We’re driving these results by prioritizing the branded portion of our product portfolio. Higher margin, branded products now generate more than 65% of our foodservice sales and that percentage has consistently increased over the last few years. In 2009 net sales of our cereal brands in foodservice channels grew 7%. Yogurt sales were up 13%, and sales for our snack brands are up 14% in these channels.

We’re also continuing to prune this portfolio. During 2009 we divested a portion of our frozen, unbaked bread dough business along with our bread concentrate business. Together, these two product lines generated roughly $150 million in annual net sales. However they were in lower growth segments. With these divestitures the percentage of our foodservice sales generated by higher margin branded products will approach 70% in fiscal 2010. Our actions to reshape the portfolio are driving operating margin growth. Over the last four years we’ve improved the margin for this segment of our business by 200 basis points. It’s not at the double-digit level yet, but that’s still our longer-term expectation. Our business today is split between three primary customer channels. Foodservice distributors and restaurant customers accounted for roughly 45% of sales in 2009. Bakery customers generated another 45% of the sales, and the remaining 10% came from convenience stores and vending accounts.

We’re focusing on the customer channels that are showing the best resilience in this economy and those with the most attractive growth and profit opportunities. According to the latest projections from Technomic, overall foodservice industry sales are expected to climb between 2% and 3% in calendar 2009. But some channels like K through 12 schools, colleges and universities, and healthcare outlets are still expected to generate modest sales gains. Food and beverage sales in convenience stores are also projected to grow this calendar year. We’re targeting our product innovation efforts on these growing foodservice channels. For example, we’re working with K through 12 school customers to be their go-to breakfast supplier, with the combination of our Big G cereals and Yoplait yogurt. And we’re expanding into hot breakfast with our new Pillsbury Mini Pancakes. I know several of you tried this at the Cagney Conference back in February. We’re also launching Yoplait Parfait Pro, which helps foodservice operators make yogurt and granola parfaits with 50% less labor. And we’re bringing lots of new snack products to our convenience store customers, including the new Nut Clusters from Nature Valley and unique spicy flavors of Chex Mix.

In 2010 we expect that reported net sales and volumes for our bakeries and foodservice segment will be below 2009 levels. We’ll have one less week of sales. We divested $150 million in revenues, and we’re expecting that overall foodservice industry trends will remain weak. We’re also assuming lower prices for bakery flour in 2010 because industry practice is to index to the underlying commodity prices. So these factors will reduce reported results. However, we expect to achieve good underlying sales growth for our branded product lines. We expect segment operating profits will be below 2009 levels too. But profits should decline less than sales due to productivity and positive mix. We see good opportunities to gain share in the current operating environment and looking longer term we still like the growth opportunities in the half a trillion dollar US market for food away from home. I don’t know when the economy will rebound, but as it does we expect consumers will revert, at least some of their former habits of eating away from home.

So, we believe the growth prospects of our brands in foodservice channels, remains excellent. So now let me summarize our key expectations for General Mills growth in 2010. We built our plans for the year assuming that the global operating environment remains challenging. On the positive side, the outlook for input costs is better. After five consecutive years of steep cost increases, we expect our input cost inflation to moderate in 2010. As a result our plan assumes little new pricing. We expect our 2010 growth rates on a reported basis to be constrained by one less week in the fiscal year and by the absence of sales from our divested businesses. Our plans also assume foreign exchange as a headwind for us in 2010. Let me give you a bit more detail on that. As we noted in today’s press release our 2010 earnings guidance includes an estimated $0.15 per share drag from foreign exchange effects. Roughly 85% of that negative effect relates to transaction of foreign exchange primarily in two markets; Canada which sources most of its finished goods from the US, and the UK which sources most of its products from continental Europe.

A good portion of this transaction FX is hedged. The other 15% of our FX estimate is translation. Our estimates for this impact are based on the rates as of May, 2009. Obviously the actual impact of foreign exchange translation on our 2010 results will depend on the currency movements throughout the year. So, including our estimates of foreign exchange effects, here is a summary of our growth expectations for fiscal 2010. And remember, this is 52 weeks of 2010 compared to 53 weeks for 2009. We expect net sales to be comparable to 2009 levels as reported. Segment operating profits should grow at a low single-digit level. Our plan assumes $30 million of restructuring expenses. We expect net interest expense to increase at a low single-digit rate and we’re assuming a tax rate of 34% for the year basically in line with the underlying effective rate in 2009. After tax earnings from joint ventures should grow at a mid single-digit rate and we’re targeting a net reduction in shares outstanding but less than our 2% long-term target as we do plan to pay down some debt. And our guidance is earnings of $4.20 to $4.25 per share before any impact of mark-to-market valuation of commodities.

These targets represent growth at the low end of our long-term model on an as reported basis. However if you exclude foreign exchange impacts our 2010 growth targets are squarely in line or above that long-term model. We continue to target a combination of superior earnings growth and improving return on capital. Four years ago we established a goal to increase return on invested capital by an average of 50 basis points per year and we’ve done that in each of the ensuing years including fiscal 2009. We’re targeting another year of ROC improvement in 2010 although at a slightly more moderate pace. And while net earnings growth will continue to be the primary driver of ROC improvement, disciplined use of cash also plays a role. Our businesses are strong generators of cash. In 2010, cash from operations totaled $1.8 billion, up 6% versus fiscal 2008.

This includes a voluntary $200 million cash contribution we made to our principal pension plans at the end of the fiscal year. With that cash contribution these pension plans ended fiscal 2009 are fully funded. For fiscal 2010 we will not be required to make any cash contribution to these plans. And the impact of pension and post retirement on the income statement should be roughly comparable to 2009. The first call on our cash in 2010 will continue to be the good growth opportunities and productivity projects we see in our business. Capital investments in 2009 totaled $563 million or just 4% of net sales. Our target for 2010 is $630 million and let me remind you that about $30 million of that budget is the replacement of our Argentina plant which will be funded by the insurance proceeds we received in fiscal 2009. In addition to replacing that plant, our other significant projects in 2010 include capacity projects for grain snack bars, pizza rolls, yogurt, and cereal. After capital investments to support our business, we prioritize returning cash to shareholders through dividends and share repurchases. General Mills annual dividend has been growing at a high single-digit compound rate in recent years.

As Ken mentioned in his opening remarks we just announced a 9% increase in the dividend for 2010. The new annualized rate represents a strong payout of our earnings to shareholders. It also represents a yield of more than 3% at recent prices for our stock. Repurchasing stock is inherent to our shareholder return model. We target an average annual reduction in diluted shares outstanding of 2%. Over the past four years, we’ve met that objective. As I mentioned earlier, we’re targeting a further reduction in average shares outstanding in 2010 but at a rate less than our long-term target because we also plan to pay down some debt this year. Our cash discipline in terms of working capital use was very good in 2009. Core working capital declined slightly from year ago levels reflecting sales timing shifts on accounts receivable and lower valuations in levels of grain inventories. Looking forward we’ll continue to target growth in core working capital at or below the rate of sales growth.

We also strengthened our balance sheet last year. Total debt at year end was $7.1 billion, up just 1% from prior year levels despite a strong growth in our business. As a result our operating cash flow to debt ratio improved to 26% and our ratio of fixed charge coverage improved to 5.3x. We also shifted our mix of debt during 2009 to longer and more fixed rate, in particular by taking advantage of a good window to term out some commercial paper with a 10 year bond that marketed at very attractive rates.

So let me wrap up my section of our presentation today with a summary of General Mills financial condition and outlook. General Mills delivered high quality sales and earnings growth in fiscal 2009 and plans call for continued growth in 2010. Our cash flow from operations is healthy and growing and we’re returning a significant portion of that cash to shareholders. And our balance sheet is strong, reflecting progress we’ve made in recent years to improve key financial ratios. I’ll look forward to talking to you more about our continued growth in 2010 as the year progresses. But now I’ll turn you back to Ken for some wrap up comments today.

Ken Powel

Alright thanks Don, so I hope that in these presentations that we’ve demonstrated that General Mills is positioned to achieve another year of good growth and returns in fiscal 2010. We’ve been investing in our businesses and strengthening our brands and our business portfolio is resilient, built to deliver good performance through all seasons including today’s challenging environment. We believe our long-term growth model is serving us well. It focuses our organization on delivering consistent, high quality earnings growth and shareholder return. Back in 2006 we established sales and earnings goals for the year 2010 based on our growth model. Two years later in 2008 we were able to raise our 2010 targets as a result of strong financial performance and today, we’ve raised those 2010 targets once more, based on the good growth of our businesses this year. With the year 2010 now at hand, we’ll need to set some new longer-term growth goals for the company and we’ll be conducting our annual long range planning process this fall and after that plan is completed, we’ll look forward to sharing some new long-term growth targets with you.

We see five key drivers of our continuing growth, innovation and margin expansion are the bedrock of what we do. We innovate to develop products that meet consumer needs. Innovation also drives our productivity initiatives and these cost savings ideas help us protect and expand margins for our businesses around the world. Now beyond these two bedrock factors, we grow by investing in advertising and other forms of consumer marketing to build our brands. We grow by partnering effectively with our customers and we grow by expanding our business in international markets where we’re really just getting started. We will stay sharply focused on this business model which is driven by holistic margin management or HMM. This company-wide discipline of leveraging productivity, mix and price, has enabled us to offset significant input cost inflation in recent years, protect our gross margins, and reinvest increasing levels of consumer marketing support in our brands. Our plans for 2010 include a high single-digit increase in consumer marketing investment. We’ll keep improving our established products by adding health attributes, by offering new flavor varieties and by making them easier to prepare. And we’ll keep innovating to bring customers great tasting new products with the nutrition, convenience, and value that they’re looking for today. Worldwide, we plan to launch more than 150 new products in the first half of 2010 alone. We have tremendous strengths to leverage as we move forward.

We compete in food categories that are on trend and growing. Consumers are spending more of their food dollars for meals at home and that trend is a tailwind for our US retail and our international businesses. Our brands hold large and growing market positions in these categories. Our company-wide focus on HMM helps us to protect margins and we’re increasing our marketing support behind our brands. Most important of all, we have exceptional people working across the business around the world. Their innovation and commitment give me great confidence in our continuing growth.

So that’s the General Mills update this morning. We had a strong year with sales up 8% and comparable EPS up 13%. We took actions during 2009 that position us for continued superior growth including strong holistic margin management that protected our margins and significant consumer marketing investments to build brands. And we’re sticking with this game plan again in 2010 and believe the prospects are very bright for another year of strong growth and returns to shareholders. So that concludes our prepared remarks. Ian, Chris, Don and I would be happy to take a few questions. Wait for a microphone so that listeners on the webcast can hear you. Thank you.

Question-and-Answer Session

Judy Hong – Goldman Sachs

Thanks. Ian, can you talk about the increased competition that you’re seeing in some of your key categories like cereal and yogurt and how you’re thinking about the merchandising dollars. Is there a need to really take that up as you’re seeing increased competition in those categories?

Ian Friendly

Yeah, we’re certainly seeing in some of our key categories increased levels of merchandising. We’ve seen that a little bit from one competitor in cereal. We’ve seen it in yogurt. And I guess we expect it in soup. That being said, our competitors are normally a very rational set of competitors who are trying to grow the categories and so far we don’t think it’s changed really the nature of our game. We’re competitive enough in that area and our level of innovation and our consumer brand support is really what we think will fuel base line growth which ultimately will be the tale of the tape. But we’ll make sure that we’re appropriately competitive in the merchandising arena and while I’ve seen a little bit early in the year that I think is hotter than I would normally like to see. I wouldn’t find any of it alarming.

Terry Bivens – JP Morgan

Thank you. So, just to follow-up on that, have you changed your merchandising plans for the year in any way? Or are those pretty steady with what you expected in relation to that answer?

Ian Friendly

Yes, our merchandising plans for next year are pretty similar levels of expenditures for this year and so there are always adjustments to be made on how to do it better, but in gross terms we see it pretty similar.

Terry Bivens – JP Morgan

If I could ask a question on HMM that encompasses a lot of things, cost savings and mix and one element of that is managing your mix well in the business. I’m just curious in a difficult economic environment as you look at 2010, do you expect mix to be positive in the year? The new products seem to be enhancing the full mix. Any other general comments about the business mix across your portfolio?

Ian Friendly

Yeah, I think mix has generally been very good and one of the things we just always have to remember is cereal is a category that absolutely thrives, well in good times and in bad, but it particularly thrives in more difficult economic times and cereal is the best mix play that General Mills can have. And so when cereal is growing at the rate it’s growing, it generally is very positive to us. So we’re seeing that is so even within other categories. We’re not seeing in our own portfolio a trade down effect per se. Generally we’re seeing mix gains. But over our entire portfolio, cereal as a category is the one that really drives it.

Don Mulligan

The other thing I would add to that over the last three years, and I think Ian you mentioned this in your presentation. We’ve had a really high focus in our new product activity on selecting for launch products that we thought would really be highly incremental and we’ve really improved the discipline around making sure that we’re launching new products that are either mix neutral or mix accretive. And our performance on that last measure of accretive new products has dramatically improved and so I think that’s another driver of positive mix as we go into this New Year.

Kris Wenker

And you guys have both concentrated on US retail, but Chris O’Leary you might want to say a word about mix internationally because you’re key platforms is working for you there too.

Chris O’Leary

Yeah, as obviously we are focused on margin expansion as our margins are below the company average but the good news is all these global platforms, Haagen-Dazs, Old El Paso, Nature Valley, have company average margins above the company average and as you saw from the presentation we’re growing those brands quite strongly. So our mix is going to naturally improve with that and that’s a key part of our strategy to improve margins around the globe.

Eric Katzman – Deutsche Bank

Good morning. Looking at your fiscal 2010 plan, you’re clearly relying much more on volume and very little on price in terms of driving the top line, which is not surprising given the current environment. Looking at the fourth quarter reported volume numbers though, adjusting for the extra week, they looked like they were down slightly on a year-on-year basis and perhaps both to the total company and in US retail. So I’m wondering whether you could address some of the factors that led to the volume declines in the fourth quarter for both the company and US retail. Did the divestitures in bakeries have a significant impact there and I know you had a tough comp with US retail volumes up 6% last year, if you could give us some color.

Ian Friendly

I can give you the US retail component and Ken or Don will comment on the rest. Our sales dollar growth let’s say in the fourth quarter which was reported at 12, but might be if you took out the effect of the extra week, would be a mid single-digit, 5%, which is very much in line with our growth model and if you looked at our consumer intake, off take I should say, over the same period it would be low to mid single-digit off take by Neilson and Wal-Mart retail link and so forth, so that’s about in line. In fact it was slightly stronger than what we were expecting. You may recall we said it at the Cagney and even at the beginning of the year that because in the year prior we had right size, right price push all our cereal particularly merchandising into Q4, that this year we would rebalance. We would have stronger merchandising spread out throughout the year and then Q4 we would be significantly below our levels of last year. That’s exactly what’s played out, mostly in cereals. It’s true in some of our other categories as well. And so our Q4 was very much designed to be that way and in actual fact relative to our expectations it outperformed and the reason it outperformed was the base line particularly in cereal were that much stronger than we had forecast. So we’re not concerned about Q4 per se. It was very much in line if not a little bit better with what we were expecting in US retail. Don and Chris, would you like to say something?

Chris O’Leary

Yeah for the two other segments, international had 5% volume growth. It had very little impact from the 53rd week because most of our countries report on a monthly basis. So that was not heavily impacted by the 53rd week. And then on bakeries and foodservice we did have the impact of the divestiture which was $150 million, about 7% of the total portfolio. It was out for most of the quarter. In addition we also had some bakery flour, similar to what we saw in Q3 where as the pricing came down, we didn’t chase volume in that segment.

Don Mulligan

I mean Eric, as you know this is also one of the lumpiest measures that we have. You can look at it, it’s best to look at volume I think on a nine or 12 month basis and we’re quite confident that our volume expectation for next year is very reasonable given the category development that we continue to see.

Unspecified Analyst

Thanks. I have a few questions. The first is a little more broader-based. The company has done a, in my opinion, a great job in terms of being kind of out front on weight loss, organic, and I suppose health-oriented products and it seems like you’re gearing up for a more ethnic push but the last time the company tried that, it failed pretty quickly with Para su Familia and I think maybe a few other products. So, I’m kind of wondering why you think now you’re going to be successful in the ethnic push.

Don Mulligan

What ethnic products?

Unspecified Analyst

Yeah.

Don Mulligan

Are you referring to some new products that you saw or—

Unspecified Analyst

Advertising.

Ian Friendly

If you look at the growth demographics of the country there’s the two most powerful on an age profile. It’s the unfortunate aging of the baby boomers and so our health initiatives help with that. And then as it relates to families which we sell a lot of products to families most child and new family formation is going to be coming from consumers of a multicultural background and I guess I don’t accept the premise. In fact we’ve been spending quite heavily, we’ve almost tripled our expenditures over the last three years against marketing to the Hispanic consumers and they’ve led our growth. They have grown stronger than the non-Hispanic consumer set. We are seeing great returns. We get an ROI on that just like we do on other aspects of our consumer spend. So as it relates to marketing to this very important large and growing part of consumers, both African American and Hispanic, we’re seeing great results. We’re very pleased with it. I think we have had, you’re quoting we’ve had, I think when we came out with products that were very specifically and narrowly designed for those communities, that hasn’t worked as well for us. When we take the products they already know and love, Honey Nut Cheerios, Yoplait yogurt, and market it in a more meaningful and targeted way, we have seen fabulous results and we’re going to do more of that.

Ken Powel

The other thing I would add to that is that, our customers are very, very interested in this entire opportunity and so we are partnering with them, particularly in the southwestern parts of the US and where we have high concentrations of Hispanic consumers. We’re developing promotional activities that we can run with them in store and this is a very positive development and opportunity for us that as Ian said, it’s driving differential growth for us.

Unspecified Analyst

Okay and then two questions on the specific parts of the portfolio to Ian, one, can you comment on the Pillsbury dough business and the potential impact of the Nestle Toll House recall.

Ian Friendly

We’re sort of in the off season right now obviously so that business doesn’t really start hitting its high seasonal impact until September and my guess is most of that will have come and gone by that time. We’re seeing no impact, negative impact on our business at all. We’re surveying consumers and it is not translating from Toll House over to Pillsbury. We’re seeing customers clearly order more of our products right now as they have empty shel